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4/9/2019 8:00:00 AM4/9/2019 10:00:00 AM Cross-Border Biotech Transactions: CFIUS and Other RisksMassBio, 300 Technology Square 8th Fl, Cambridge, MA 02139
For early-stage research companies seeking equity capital or pursuing strategic alliances with foreign partners or investors, there are considerable risks to consider when conducting these transactions, whether on U.S. soil or in foreign lands. Nonetheless, despite cumbersome impediments, more U.S. biotech and medical device companies are pursuing these alliances or investments, believing that the risks are outweighed by the benefits. Of particular note, in recent years Chinese and other Asian investors have invested record amounts of money into U.S.-based biotechnology firms. Furthermore, the equity investment arms of European Pharma companies are also heavily investing in U.S. biotech companies, as they have accomplished for many years. All of these investment and partnering pursuits are now in trouble, due to recent U.S. government pronouncements, in particular, the new CFIUS proclamations. On November 10 2018, the Committee on Foreign Investment in the United States (“CFIUS”) expanded its regulation of cross-border transactions with several adverse announcements, regulations which may impede the flow of foreign capital into U.S. biotech companies, hinder strategic partnering opportunities, and prohibit acquisitions of U.S. biotech companies -- even if the U.S. company is never leaving the homeland. The life science and biotech industry sectors falls under CFIUS’s list of “27 critical industries” that require expanded – and protracted -- review of foreign investments, strategic partnerships with foreign Pharma partners, and acquisitions involving foreign acquirers. Whether engaging in collaboration arrangements, joint ventures, investments or acquisitions involving foreign players, management of biotech companies need to learn the newest set of roadblocks, snafus and hurdles that they should carefully consider as a consequence of the new CFIUS regulations.
Larry Alberts is co-founder and CEO of Cam Med, which is developing the Evopump, a wearable drug-delivery pump. The Evopump offers a user-friendly, bandage-like form with the potential to deliver multiple injectable medications with the cost structure of an injection pen. Cam Med is funded in part by investors from China.
Head of Healthcare Corporate Finance and East/Central Life Science, Silicon Valley Bank
Katherine Andersen is a senior market manager covering Healthcare Corporate Finance in the U.S. in addition to the East and Central regions for SVB’s national Life Science practice. She also sits on the Board of Directors for SVB's China Joint Venture. Prior to SVB, Katherine was a Senior Vice President for Wells Fargo Bank leading the Life Sciences business development and relationship management efforts for the New England region. Before that, she was a Director at Wells Fargo Capital Finance focused on front-end business development and underwriting of structured loans, ultimately totaling over $3.0B in commitments. Prior to Wells, she held various positions across mergers and acquisitions, finance, equity derivatives, audit, and management while at Affiliated Managers Group, Merrill Lynch, GE Corporate Audit Staff and GE Capital.
Katherine has a bachelor’s degree in finance and economics from Virginia Tech. She has also completed Dartmouth’s Tuck Executive Leadership and Strategic Impact Program, Wells Fargo’s Transformational Leadership Program, the Program on Negotiation at Harvard Law School and the GE Capital Financial Management Program.
Away from work, Katherine serves on the Finance Advisory Board for Virginia Tech, the Advisory Board for the WEST Organization, and Chairs the Corporate Council for the American Cancer Society’s AstraZeneca Hope Lodge.
John Hession is a Partner at Morse, Barnes-Brown & Pendleton, and a member of the firm’s Corporate, Venture Capital and Life Sciences practice groups. Previously, John was a co-founder of Cooley LLP's Boston office, and served as the Managing Partner of the Cooley Boston office for its first several years of operation, helping to steer and grow the Boston office from ten to seventy-plus professionals and staff. For the last thirty-five years, John has represented emerging-growth companies, as both a legal and business advisor, principally in the life sciences, medical device, hardware, software and software services sectors, as well as angels and venture capital funds in the investment process. John is also angel investor in emerging companies.
John’s practice includes both start-up, emerging growth and later-stage company work, where he serves as outside general counsel. This work includes corporate governance; equity-based compensation strategies; mergers and acquisitions (representing buyers and sellers); and strategic alliances, corporate partnering, joint ventures, collaboration and development projects, and other strategic alliances involving technology transfers; as well venture capital and angel financings of companies in these sectors, representing principally companies and their management teams. John has structured and negotiated more than 400 debt and equity financings, ranging in scale from $500,000 to $250 million, and more than 350 acquisitions ranging in size from $1.0 million to $4.2 billion. During his thirty-five year career, John has represented more than 400 companies from the earliest stages of development, from cradle to culmination, from inception to liquidity (including public offering and acquisitions). John has won a number of industry awards during his career, including Best Lawyers in America, IP Stars (Managing Intellectual Property), Lawdragon 500 Leading Deal Makers, a Massachusetts Super Lawyer, and Best Lawyers in New England.
Carl Valenstein focuses his practice on domestic and international corporate and securities matters, mergers and acquisitions, project development, and transactional finance. He counsels extensively in the life science, telecom/electronics, and maritime industries, and he has worked broadly in Latin America, the Caribbean, Europe, Africa, Asia and the Middle East. He is the co-chair of the International Section of the Boston Bar Association and co-chairs the firm’s Cuba Initiative. He is a frequent speaker at conferences on a variety of international compliance and transactional topics.